Colleges' bloated bureaucracy

In Maryland and across the nation, universities are increasing administration faster than instruction

August 17, 2010|By Jay P. Greene, Brian Kisida, and Jonathan Mills

As students return to college this fall, parents and taxpayers are probably wondering ‎where all of the money we give to universities actually goes. They may be ‎disappointed to discover that administration is consuming a large and rapidly growing ‎portion of university resources. Funds devoted to instruction, research and ‎service — the primary functions of a university — are growing much more slowly.‎

In a recently released report for the Goldwater Institute, we examined data collected by ‎the federal government from the country's leading 198 public and private universities. ‎The results are disturbing. In 2007, nearly 39 percent of all full-time employees at these ‎universities were engaged in administration, an increase of 39 percent from the number of ‎administrators per 100 students in 1993. Only 29 percent of full-time employees were ‎engaged in instruction, research and service, an increase of 18 percent since 1993. ‎

One might think that as enrollments increase, universities would need relatively fewer ‎administrators per student since they could spread those fixed costs over a larger base. ‎Instead, the opposite is occurring. As universities increase their enrollment and ‎receive more money, they expand the ranks of administrators even more rapidly.

‎Rather than achieving economies of scale in administration so that more resources ‎can be redirected to core functions, America's leading universities increased ‎administration significantly faster than enrollment and almost twice as fast as ‎teaching, research and service.‎

Maryland's public universities have not escaped this problem of administrative bloat. ‎At the University of Maryland College Park, the number of full-time administrators per ‎‎100 students grew by 68 percent between 1993 and 2007, while the number of full-time ‎teachers, researchers and service providers only grew by 16 percent. We see the same story ‎at the University of Maryland, Baltimore County, where administration increased by 77 percent, compared to ‎only a 57 percent increase in teaching, research and service. ‎

Why would universities give such priority to administration? The simple answer is that ‎they do so because they can. As long as parents and students are willing to pay ever-‎increasing tuitions and taxpayers are willing to continually increase subsidies for ‎higher education, university administrators will be able to direct those resources in the ‎way they prefer. And not surprisingly, administrators tend to prefer hiring ever more ‎administrators and paying those administrators ever-higher salaries.‎

Unfortunately, the politically attractive policy of increasing federal and state subsidies ‎for higher education exacerbates the problem. Because policies such as direct state ‎and federal appropriations to higher education insulate families from the full financial ‎burden of administrative bloat, those families are less sensitive to university costs, and ‎administrators face less pressure to economize. There is a vicious circle — universities ‎pass along the cost of administrative bloat to consumers in the form of higher tuition, ‎which causes families to demand higher subsidies from the government, which ‎enables even higher administrative costs and tuition rates.‎

As painful as it may be at first, the only way to break this vicious circle is to reduce ‎government subsidies of higher education. As of 2007, tuition only generated about a ‎quarter of total university spending, the rest coming from some combination of direct ‎government subsidies, donations and fees for services. If tuition had to cover a larger ‎share of university expenses, families would be more cost-conscious and force ‎administrators to trim administrative expenses while concentrating resources on their ‎core missions of teaching, research and service.‎

We have an example of where this has been accomplished. At the University of ‎Michigan, state funding dropped to less than 10 percent of total revenue. Between 1993 and ‎‎2007, the University of Michigan was one of the few leading universities that actually ‎reduced the number of administrators, cutting the number per 100 students by 5.5 percent. ‎Of the universities we examined, Michigan had one of the lowest increases in ‎administrative spending. ‎

Maryland's universities may howl that they already pinch every penny, but when faced with ‎cuts in government subsidies, they'll discover greater efficiencies and reduce ‎administrative bloat, just as Michigan did.

It won't be easy, but there is no other way to ‎control runaway costs in higher education.‎

Jay P. Greene (jpgark@gmail.com) is a Senior Fellow at the Goldwater Institute and the 21st Century Professor of ‎Education Reform at the University of Arkansas, where Brian Kisida and Jonathan Mills are research ‎associates.‎

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